LAURA JAYES:
Thanks so much for your time, Treasurer. What have you seen on the ground? Is it a natural disaster?
JOSH FRYDENBERG:
Good morning. Well, it is certainly the worst drought in living memory. I’m in Inverell with the Water Minister, David Littleproud, and the local member, Barnaby Joyce, and we've met with local businesses, we have met with the local community, as well as local government representatives, and they have told us about the devastating impact that this drought is having. Shops have closed, farmers have sold their stock and families have been really hurt. It's really a good opportunity for me to come and hear firsthand these stories and to talk through ways that the Government can continue to help.
LAURA JAYES:
Is it just a listening tour? Because these people have been suffering through drought for a number of years now. What will come off the back of this? Will there be more money, more government assistance, or is it just that, a listening tour?
JOSH FRYDENBERG:
Well, as you know, just last Friday, Laura, the Prime Minister announced an extra $100 million of support, and we are providing support in a number of ways. We've got income support through the Farm Household Assistance packages that we provide, up to $12,000. Then we've also got support for Local Government. I was speaking, for example, to the Acting Mayor of Gwydir last night and she was telling us how that money that has been provided to them, has allowed them to put a fence around the local airport, to upgrade the local stables at the rodeo ground, to improve the stadium at the cricket ground. These are small projects that are making a big difference because they are employing local people. We will continue to do more because these communities are, of course, hurting very, very badly.
LAURA JAYES:
Just like the farmers where you are, everyone has been affected by the rate cut. The banks are not passing on the cut in full, despite your urgings to do so. When was the last time the banks, the big four in particular, actually listened to you and the Prime Minister?
JOSH FRYDENBERG:
Well, this is a pattern of behaviour we've seen from the banks, not just during our term in government but indeed during the previous term in government, Laura. There were fourteen separate rate cuts under Labor. Only five of those were passed on in full. It is, of course, very disappointing that the banks have chosen to go this way because the RBA has pointed to the reduced cost of funds to the banks and the importance of passing on these rate cuts. For a family with a $400,000 mortgage, the full 25 basis point rate cut would be worth an extra $720 a year in their pockets in reduced interest payments. Now some of the smaller lenders I know - I pointed the other day to Athena being one of them - have actually reduced their rates by that full 25 basis points and are offering rates below 3 per cent. So people need to shop around. The only way the banks will get the message is through the voices of their customers and through their customers voting with their feet. So my message to them is to get the best possible deal and make your concerns directly known to your local bank.
LAURA JAYES:
But, Treasurer, how? How can people shop around when the big four are running this cartel-like behaviour? You say, “Go to some of the smaller banks.” St George only cut their rate by 0.15 per cent. UBank, you're right, passed on the full 25 basis point cut, but that is also an offshoot of one of the big four which is NAB, so our hands are really tied, aren't they?
JOSH FRYDENBERG:
No, there is more competition coming into the market and one of the more significant pieces of legislation that we have passed since coming to government is the Consumer Data Right which will actually allow people to have their banking data given to other service providers to get the best possible deal for them. So we are using new technology, we are providing more licences to competitors, and we want people to absolutely shop around and vote with their feet.
LAURA JAYES:
It doesn't seem that customers have many options at the moment. Isn't one of the biggest problems is that banks, the big four, the smaller lenders included, actually reluctant to lend at the moment? What do you say there?
JOSH FRYDENBERG:
Well, that is a different issue, and that goes to the regulation and particularly what are known as the responsible lending obligations, and I made a speech last week where I said we needed to get the balance right. You can't have the pendulum swing too far towards regulation and to try to stamp out personal responsibility as people seek a loan. You've got to get the balance right and I'm very confident that that will occur because we need the free flow of credit across the economy.
LAURA JAYES:
Jim Chalmers today, as revealed in the Australian Financial Review, has been reaching out to business since the election. You would welcome that, wouldn't you?
JOSH FRYDENBERG:
I think it is a bit of a joke from the Labor Party. They may have changed their language, but they haven't changed their tune. They are still on the books to have $387 billion of higher taxes. The thing about the Labor Party is they went around talking about the ‘top end of town,’ criticising small business, attacking retirees, wanting to increase taxes on people who bought an investment property; that's in their DNA. Are they saying they believed it before the election, but that they don't believe it now? No one can take them seriously. Just like their promises of a surplus, Jim Chalmers is wanting to make all these spending promises but then he’s still talking about a surplus. The fact is Labor Party will always be the party of higher taxes. Labor was “proud and pleased” of their retirees and housing taxes, that's what Jim Chalmers himself has said, and I think people are just seeing these are being words, not deeds.
LAURA JAYES:
Let's finally circle back to the drought because that is the biggest issue for us and for the people where you are at the moment. What can we do to help farmers? Government does play a role, but what can we do? Do you suggest we start looking at holidays in places like Inverell to boost the local economies, and where should we go?
JOSH FRYDENBERG:
This is a beautiful town, 16,000 people, it dates back to the 1830s. As you drive in, you can see the old courthouse and a number of old historic buildings. I can tell you they serve a good pub meal down in Inverell as well. Last night I had a good chicken schnitzel with a soothing ale by its side. The people are wonderful. They are extremely resilient, but they are also doing it very tough. I think people taking a holiday here in these country towns would be really good for local businesses, and that's what they want. In fact, when I met with the Chamber of Commerce yesterday with David and Barnaby, that was one of their messages that they wanted to get out; people come to these towns, see what is happening, but spend their money here. That will help keep the town going through this very challenging period.
LAURA JAYES:
Treasurer, thank you for your time.
JOSH FRYDENBERG:
Good to be with you.